Flood-insurance program likely to stay afloat

Published: Saturday, September 25, 2010 at 6:01 a.m.

Last Modified: Saturday, September 25, 2010 at 12:48 a.m.

HOUMA — Congress has sent President Obama a bill that would renew the program that provides the only flood-insurance policies available to thousands of Houma-Thibodaux area residents and millions across the U.S.

The House voted Thursday to extend the National Flood Insurance Program for a year, one day after the Senate did the same. Media reports say Obama is expected to sign the bill before the flood-insurance program’s Sept. 30 expiration.

Sen. David Vitter, R-La., lead author of the bill, said the program was mired for months in politics, as members of Congress packaged its renewal in bills that also temporarily extended unemployment benefits. As Republicans and Democrats bickered over passing the bill in the face of a major federal deficit, the program was allowed to lapse three times this year.

“This is a huge win for Louisiana,” Vitter said in a statement. “For months, I made the case that this issue was too important to too many people to be used as a political football, and I know that the millions of homeowners who have anxiously followed this legislation are breathing easier today.”

About 4.5 million Americans depend on the program as insurance against flood losses. Louisiana has 500,000 policy holders, ranking third behind Texas and Florida.

While short lapses don’t affect current policy holders, they prevent prospective buyers from closing on new homes because banks and other mortgage lenders require owners to have flood insurance.

Sen. Mary Landrieu, D-La., said that the ability of homeowners to buy and sell homes without delay is fundamental to U.S. economy’s recovery from a severe recession. Uncertainty over flood insurance has wreaked havoc on an already unstable real-estate market, she said.

“The National Flood Insurance Program is extremely important to all current and future development in Terrebonne for the protection it provides us from flooding,” said Pat Gordon, Terrebonne’s planning-and-zoning director. “Everyone in Terrebonne Parish needs flood insurance, not just people in a flood hazard area.”

Gordon added that the importance of buying flood insurance is heightened now because Terrebonne’s new federal flood-risk maps, which may put many homeowners in higher-risk flood zones, will be released in December. Residents who expect their homes may be moved to a higher-risk zone can buy flood insurance now and have their lower price locked-in before the flood maps are in place, he said.

“Louisiana families and small businesses depend on the flood insurance program for protection after disasters, and the one-year extension we passed today will keep this critical safety net from expiring on Sept. 30,” said U.S. Rep. Charlie Melancon, D-Napoleonville. “But this short-term fix does not replace the need to strengthen and reform the flood-insurance program.”

In July, Melancon worked to pass a five-year extension, but the Senate failed to act on the bill.

For years, critics have derided the program as a costly taxpayer subsidy that encourages developers to build and people to live in coastal areas at high risk of hurricanes and other places prone to flooding. The program loses about $200 million a year, the U.S. General Accounting Office reported in April, and owes the federal treasury $18 billion.

One reason for the massive debt is that political pressure to keep insurance rates low has prevailed in Congress, and the program’s revenue has failed to cover the cost of paying claims for flood damage.

In a joint statement with Vitter and other coastal-state senators, Sen. Kay Bailey Hutchison, R-Texas, said the one-year extension “gives Congress time to get serious about modernizing the program while continuing to allow those living in the floodplains access to flood insurance.”

<p>HOUMA — Congress has sent President Obama a bill that would renew the program that provides the only flood-insurance policies available to thousands of Houma-Thibodaux area residents and millions across the U.S.</p><p>The House voted Thursday to extend the National Flood Insurance Program for a year, one day after the Senate did the same. Media reports say Obama is expected to sign the bill before the flood-insurance program's Sept. 30 expiration.</p><p>Sen. David Vitter, R-La., lead author of the bill, said the program was mired for months in politics, as members of Congress packaged its renewal in bills that also temporarily extended unemployment benefits. As Republicans and Democrats bickered over passing the bill in the face of a major federal deficit, the program was allowed to lapse three times this year.</p><p>“This is a huge win for Louisiana,” Vitter said in a statement. “For months, I made the case that this issue was too important to too many people to be used as a political football, and I know that the millions of homeowners who have anxiously followed this legislation are breathing easier today.”</p><p>About 4.5 million Americans depend on the program as insurance against flood losses. Louisiana has 500,000 policy holders, ranking third behind Texas and Florida.</p><p>While short lapses don't affect current policy holders, they prevent prospective buyers from closing on new homes because banks and other mortgage lenders require owners to have flood insurance.</p><p>Sen. Mary Landrieu, D-La., said that the ability of homeowners to buy and sell homes without delay is fundamental to U.S. economy's recovery from a severe recession. Uncertainty over flood insurance has wreaked havoc on an already unstable real-estate market, she said.</p><p>“The National Flood Insurance Program is extremely important to all current and future development in Terrebonne for the protection it provides us from flooding,” said Pat Gordon, Terrebonne's planning-and-zoning director. “Everyone in Terrebonne Parish needs flood insurance, not just people in a flood hazard area.”</p><p>Gordon added that the importance of buying flood insurance is heightened now because Terrebonne's new federal flood-risk maps, which may put many homeowners in higher-risk flood zones, will be released in December. Residents who expect their homes may be moved to a higher-risk zone can buy flood insurance now and have their lower price locked-in before the flood maps are in place, he said.</p><p>“Louisiana families and small businesses depend on the flood insurance program for protection after disasters, and the one-year extension we passed today will keep this critical safety net from expiring on Sept. 30,” said U.S. Rep. Charlie Melancon, D-Napoleonville. “But this short-term fix does not replace the need to strengthen and reform the flood-insurance program.”</p><p>In July, Melancon worked to pass a five-year extension, but the Senate failed to act on the bill.</p><p>For years, critics have derided the program as a costly taxpayer subsidy that encourages developers to build and people to live in coastal areas at high risk of hurricanes and other places prone to flooding. The program loses about $200 million a year, the U.S. General Accounting Office reported in April, and owes the federal treasury $18 billion.</p><p>One reason for the massive debt is that political pressure to keep insurance rates low has prevailed in Congress, and the program's revenue has failed to cover the cost of paying claims for flood damage.</p><p>In a joint statement with Vitter and other coastal-state senators, Sen. Kay Bailey Hutchison, R-Texas, said the one-year extension “gives Congress time to get serious about modernizing the program while continuing to allow those living in the floodplains access to flood insurance.”</p>